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Becktell Industries has an offer to build a special product for the state highway patrol. The contract will cover a period of 10 years. The

Becktell Industries has an offer to build a special product for the state highway patrol.
The contract will cover a period of 10 years. The projected cash flows associated with
the contract are given below:
Required: Complete an analysis to calculate the net present value of the above cash flows. The
company uses 16% as its cost of capital.
Cost of new equipment 300,000
Working Capital needed 125,000
Net annual cash receipts 85,000
Salvage Value at end 60,000

Should the contract be accepted? Explain in detail.

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